Equatorial Guinea - Rehabilitation Import Project

DOrsnt or The World Bank FOR OFFICLAL USE ONLY C/'. /Go-zX Report No. P-4288-EG REPORT AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL DEVELOPMENT ASSOCIATION TO THE EXECUTIVE DIRECTORS ON A PROPOSED DEVELOPMENT CREDIT OF SDR 5,400,00 AND A PROPOSED SPECIAL AFRICAN FACILITY CREDIT OF SDR 3,600,000 TO THE REPUBLIC OF EQUATORIAL GUINEA FOR A REHABILITATION IMPORT PROJECT April 16, 1986 This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  CURRENCY EQUIVALENTS Currency Unit = CFA Franc US$1.00 = CFAF 378.05 (December 31, 1985) CFAF 1 million - US$2,226 (average 1985) WEIGHTS AND MEASURES Metric US Equivalent 1 kilometer (km) = 0.621 miles 1 hectare (ha) 2.471 acres 1 kilogram (kg) = 2.205 pounds 1 metric ton (t) = 0.984 long ton ABBREVIATIONS AND ACRONYMS BADEA = Banque Arabe de D6veloppement Economique en Afrique (Arab Bank for Economic Development in Africa) BCD = Banco de Credito y Desarrollo (Credit and Development Bank) BEAC = Banque des Etats de I'Afrique Centrale (Bank of the Central African States) CCCE = Caisse Centrale de Coop6ration Economique (French Central Fund for Economic Cooperation) CFA = Comunaute Financiire Africaine (African Financial Community) FCFA = Franc of the African Financial Community CLUSA = Cooperative League of the United States of America FAC = Fonds d'Aide et de Coop&ratiou (French Aid and Cooperation Fund) FAO = Food and Agriculture Organization of the United Nations GTZ Gesellschaft fuir Technische Zusa-menarbeit (German Agency for Technical Cooperation) NCESD = National Council for Economic and Social Development OPEC = Organization of Petroleum-Exporting Countries RIC = Rehabilitation Import Credit UDEAC = Union Douaniere des Etats de l'Afrique Centrale (Customs Union of the Central African States) WFP = World Food Program FISCAL YEAR January 1 - December 31  FOR OMCIL USE ONLY EQUATORIAL GUINEA REHABILITATION IMPORT CREDITS CREDIT SUMMARY Borrower: Republic of Equatorial Guinea Executing Agency: Ministry of Finance IDA Credit Amount: SDR 5.4 million (US$6.0 million equivalent) Special African Facility Credit Amount: SDR 3.6 million (US$4.0 million equivalent) Terms: Standard IDA terms Description: The proposed credits would help the country increase its productive capacity and exports during a critical phase of the economic rehabilitation program on which the Government has recently embarked and which aims at restoring balance of payments and budgetary equilibria while allowing service of the external debt. They would provide funds over the short term to import critically needed agricultural inputs and rehabilitate selected infrastructure and social sectors. The credits would finance eligible imports of (i) agricultural inputs and tools, spare parts for agricultural machinery, and equipment, including fishing equipment; (ii) vehicles, maintenance equipment, spare parts, and fuel for the transportation sector; (iii) vehicles, equipment, and machinery for the water supply/sanitation sector; (iv) equipment and spare parts needed in the electricity and telecommunications sectors; and (v) vaccines, equipment, vehicles, and medicines for the health sector. The credits would also finance technical assistance to the Government for Credit administration, procurement, and utilization of the items imported. Benefits and Risks: The principal benefit expected from the proposed operation arises from higher farm incomes and government revenues through the removal of con- straints to increased agricultural production and exports. Improvements In the water-supply network, in the health sector, in electricity and IThis document has estricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  (ii) in telecommunications with the outside world should make the country a more efficient and healthier place. Other provisions of the credits would strengthen the investment budgeting and planning process and donor coordination, and would not only make the allocation of scarce resources more effective, but also help restore Equatorial Guinea's credibility with the international community and thereby establish an environment more conducive to flows of official aid and private investment. As most of the country's poor live in rural areas, the operation would also benefit them through increased production of food- stuffs and lower prices. ., The main risk is that the Government may not succeed in implementing the rehabilitation program. This possibility, however, seems remote: Equatorial Guinea's recent record of readiness to Implement reform, rehabilitation, and austerity measures which, at times, have been painful, evidences the Government's strong commitment to the program. The interim review should also reduce this risk. The risk arising from a shortage of local skills is offset by the technical assistance arrangements. Estimated Disbursement: The proceeds of the proposed credits would be disbursed in two tranches. The first tranche, Amounting to 60 percent of the proposed credits or to disbursements made by January 31, 1987, whichever came earlier, would be available immediately upon effectiveness and would include retroactive financing of up to US$1.0 million equivalent; and the remaining funds subject to the satisfactory conclusion of a performance review. Disbursements of the total amount of the two credits are expected to be completed by July 31, 1988. Staff Appraisal Report: None Map: IBED 10259R2  REPORT AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL DEVELOPMENT ASSOCIATION TO THE EXECUTIVE DIRECTORS ON A PROPOSED IDA DEVELOPMENT CREDIT AND A PROPOSED SPECIAL AFRICAN FACILITY CREDIT TO THE REPUBLIC OF EQUATORIAL GUINEA FOR A REHABILITATION IMPORT PROJECT 1. I submit the following report and recommendation on a proposed Rehabilitation Import Credit (RIC) to the Republic of Equatorial Guinea for SDR 9.0 million (US$10 million equivalent, of which US$6.0 million under an IDA Credit and US$4.0 million under a Special African Facility Credit) on standard IDA terms. PART I - THE ECONOMY 2. A report entitled "Equatorial Guinea-an Introductory Economic Report" (Report No. 4011-EG) was distributed to the Board on June 15, 1983. Since then, the Bank Group has monitored the economy in close coordination with the IMF and through missions, the latest o' which took place in November 1985. The findings of these missions have been included in this report. The Political Context 3. When Equatorial Guinea became independent from Spain in 1968, it had one of the highest per capita incomes in Sub-Saharan Africa. The subsequent eleven years of the Macias Nguema regime were a period of serious economic mismanagement and destructive misrule. Agricultural services and institutions ceased to operate, and production of cash and food crops declined drastically. Basic services in health care and education deteriorated badly. Water and electricity facilities, roads, ports, and the telecommunications network were neglected and fell into disrepair. Gross violations of human rights, including arbitrary executions, particularly of educated people, caused approximately one third of the population to flee the country. Foreign investment came to a halt, and the state-operated trading system broke down. The public administration virtually ceased to operate, barter trade increased, and the population at large barely managed to survive. Consequently, Equatorial Guinea's per capita income dropped from US$260 equivalent in 1968 to an estimated US$175 in 1981, both in current terms. 4. In late 1979, Macias Nguema was deposed by the military, which established a Supreme Military Council beaded by Lieutenant Colonel Nguema Mbasogo. The new Government took steps to restore a measure of democratic process and reestablish the legal and administrative framework needed to support economic rehabilitation. In August 1982, a referendum approved a new constitution establishing a National Assembly and a new judicial system. The country's political isolation was overcome as Spain. France. other countries, and international organizations resumed their financial and technical cooperation.  Economic Potential and Recent Developments 5. Equatorial Guinea's land area is 28,000 km2, with a population of about 350,000, according to a 1983 census. The national territory consists of Continental Guinea, named Rio Muni, on the African mainland, and Insular Guinea, comprising Bioko and four other islands (Corisco, Greater Elobey, Smaller Elobey, and Pagalu), in the Gulf of Guinea. Malabo, the national capital on Bioko, is 250 km from Bata, the main city of Rio Muni, and almost 700 km from the island of Pagalu. Commmnications and administration are therefore particularly difficult. 6. Insular and Continental Guinea have different climates, ethnic compositions, and economic bases. Bioko has rainfall all year, and the dominant economic activity is cash-crop (cocoa) agriculture, with food crops playing a secondary role. Rio Muni is covered with forests and has a more pronounced dry season. There, food cropping is the dominant economic activity, and cash crops (cocoa and coffee) play a secondary role. Traditionally, Bioko's cocoa was sold on the world market, and foodstuffs were imported to feed the local population and the large numbers of foreign contract workers on the plantations. Bioko is a-ire developed and urbanized than Rio Muni, yet approximately 80 percent of the population live in Rio Muni. 7. The economy is based on agriculture, including fishing and forestry, which accounts for about 50 percent of GDP and virtually all exports. Subsistence agriculture predominates, but cocoa, coffee, and timber provide monetary income for the population, foreign exchange, and government revenues. Little manufacturing exists, but wood and cocoa processing have, in the past, accounted for approximately 5 percent of GDP. Commerce accounts for about one tenth of GDP, and construction, public works, and services, for roughly one third. Preliminary surveys have found encouraging indications of titanium, iron ore, silica, manganese, uranium, and alluvial gold. Oil exploration has been going on since the mid-1960s and has recently accelerated with assistance from Spain, the United Nations, and IDA, which has financed technical assistance for the sector (para. 20). 8. During 1980-84, the Government introduced a series of policy measures aimed at revitalizing agricultural production and exports. The cocoa export tax was reduced by two thirds, and both cocoa and coffee producer prices were increased considerably. Foreign plantation owners were invited to return to the country and resume cocoa production, and seasonal credits were provided at a modest level. A new forestry law, allowing more liberal repatriation of profits and a more advantageous tax regime, was promulgated in the hope of spurring foreign investment in the forestry sector. These measures, though important, only partially stimulated production, since they did not remove the basic price distortions or address the shortage of foreign exchange. Consequently. economic performance over 1980-84 was only modest. Although production of food crops rose, it remained low by West African standards. Production of cocoa, which appeared to be recovering in 1982, declined again in 1984 and  - 3 - averaged only 7,200 tons a year during 1980-84, compared to 37,000 tons a year during the late 1960s. Timber production has increased fivefold since 1980 but still amounts to less than one third of an estimated marketable production of 300,000 tons a year. The country has the potential to be self-sufficient In food, but some foodstuffs (such as fish and fish products) are currently being imported. 9. Since the partial measures introduced during 1980-84 failed to stimulate production, the Government began in late 1984 to address the country's development constraints with bolder, more comprehensive and far-reaching policy reforms. A crucial one was the devaluation of the epkwele by 82 percent on January 1, 1985, and its replacement with the CFA franc as the national currency, in the context of Equatorial Guinea's integration into the CFA franc monetary zone as a memer of the Bank of the Central African States (BEAC). The Government's current economic and financial rehabilitation program is supported by an Iff stand-by arrangement of SDR 9.2 million (approved on June 28, 1985). The IMF ascertained in November 1985 that the Government was generally in compliance with the stand-by program. However, an unforeseen decline in cocoa exports (para. 28), and its impact on the balance of payments and fiscal revenues, necessitates a new Stand-by that is now expected to be negotiated with the IMF in June 1986. Budgetary Situation 10. The devastation of Equatorial Guinea's economy in the 1970s was accompanied by the complete disarray of its public finances. Under the Macias regime, public financial transactions were recorded only sporadically, and the accounts of the Treasury, the Bank of Equatorial Guinea (the former Central Bank), and the public enterprises were not kept separate. The new Government reintroduced regular budgetary procedures with technical assistance from the IMF, France, and Spain, and in April 1980, the first formal budget since 1974 was enacted. Since 1984, the budgetary process and fiscal discipline har-e been considerably improved by recording revenues and expenditures monthly, which made it possible to monitor fiscal performance throughout the year (Annex 1, table 2). 11. Overall budgetary deficits averaged about 23 percent of budgetary expenditures during 1980-84 because of haphazard and intermittent revenue collection and unplanned expenditures. These deficits were financed mostly by the Central Bank. The recent substantial devaluation of the national currency, the country's membership in the CFA franc zone, and technical assistance to the Ministry of Finance from other BEAC member countries and France have, however, improved government control over revenues and expenditures significantly. Although tax revenues have been increasing slower than originally envisaged under the INF program due to payment lags in connection with cocoa shipments, a slight budgetary surplus is estimated for 1985, mainly as a result of the rescheduling obtained at the July 1985 meeting of the Paris Club (para. 14).  -4- Balance of Paymouts 12. During most of the 1970., the balance of payments recorded surpluses mainly due to low import levels. International transactions were handled by the Government or state enterp-ises, and only the most essential goods were imported. However,following the reopening of the economy in 1980, the balance of payments deteriorated drastically (Annex 1, table 1). Merchandise imports rose from an annual average dl US$16 million during 1977-79 to US$33 million during 1980-84. At the same time, merchandise exports recovered slowly from their record low level of US$15 million in 1980 to only US$19 million in 1984. Three factors caused the disappointlng export performance: (i) very low quantities of cocoa and timber exports; (ii) low cocoa quality because of years of neglect, translating into low unit values; and (iii) declining world-market prices for cocoa and timber. Substantial underinvoicing of both cocoa and timber exports also contributed to lower estimated unit export values. 13. The services balance also deteriorated rapidly during 1980-84, mainly because of the resumption of interest payments on the external debt. The current account balance deteriorated from an estimated average annual surplus of about US$6 million during 1976-79 to an average annual deficit of US$17 million during 1980-84, or about 26 percent of estimated GDP, on average. Net capital inflows rose significantly during 1980-82 but declined sharply in 1983 and 1984, reflecting rapidly increasing amortization payments and the administration's limited capacity to prepare and implement investment projects. The overall balance of payments deficit averaged US$16 million a year during 1980-84 (excluding accumulation of arrears). The deficit is estimated to have been about US$14 million in 1985. Although in 1985 the current account improved by US$3 million compared to 1984 and net inflows of short-term capital increased by US$4 million, the overall balance deteriorated by US$3 million because of slow project implementation and a lack of confidence in the domestic banking system which led to net unrecorded capital outflows. The economic recovery program is expected to result in increasing imports over the next few years, but a projected increase of exports of some 19.4 percent p.a. (in current terms) between 1985 and 1987 and large net medium and long-term capital inflows, mainly due to the RIC. are expected to limit Equatorial Guinea's overall balance of payments deficit to an average US$2.4 million a year in 1986 and 1987. or about 9 percent of projected export earnings. External Debt 14. Since the resumption of foreign aid in 1980. outstanding and disbursed public debt, including obligations to the IMF. has more than tripled, amounting at the end of 1984 to an estimated US$120 million, including payment arrears of US$42 million. A large part of the debt contracted in the early 1980s consists of credits used to finance imports of consumer goods- At a Paris Club meeting held on July 22, 1985, Equatorial Guinea received favorable terms from its creditors, who agreed to reschedule 95 percent of the arrears as of December 31, 1984, including late interest due on them, and 100 percent of principal and interest  falling due between January 1, 1985, and June 30, 1986. Debt service payments (including the DMF) after rescheduling, amounted to US$17.8 million in 1985 (vs. US$24.2 million before rescheduling), and are projected to be US$19.0 million In 1986. This is equivalent to 67 percent (compared to 99 percent before debt relief) of projected merchandise and NFS exports in 1985 and 71 percent In 1986. Although debt service will continue to be a burden In the medium term, the expected increase in exports (para 28) would reduce the debt service ratio (excluding the IMF and short-term debt) to about 22 percent by 1990 (Annex 1, table 1). Development Constraints, Policy, and Prospect. 15. At an International Donors' Conference (UNDP Round Table) held In Geneva in April 1982, the Government presented a Reconstruction Program for 1982-84. The program vas intended to form a link between the emergency measures of 1980-81 and the medium-term development plans the Government hoped to begin preparTing in 1985. It aimde at revitalizing domestic food production, stimulating exports of cash crops, and providing basic Infrastructure. The donors' conference provided, for the first time since Independence, and after many years of Isolation, a forum to present the country's economic situatlon and development needs to the international comunity. It provoked a great deal of interest In Equatorial Guinea's problems but generated little additional aid because it was overly ambitious, lacked focus, and proposed projects which were insufficiently prepared. Moreover, most bilateral and international donors were unfamiliar with conditions in Equatorial Guinea and hesitated to finance projects. 16. Equatorial Guinea's economic recovery over the past five years has been constrained by three major factors. First, there is a severe shortage of skilled persons at all levels. Second, the former national currency was greatly overvalued and inconvertible. Low exports, a shortage of foreign exchange, excess demand for imported goods, and expansionary fiscal policies resulted in a parallel exchange rate significantly different from the official one. The overvalued exchange rate, generally low wages, and goverament intervention in many economic activities led to major price distortions and Inadequate producer incentives, a situation which discouraged economic activities in general and agriculture in particular. Third, the dilapidation of productive capacity and related physical infrastructure continued to hamper reconstruction efforts by the Government and the private sector. 17, The country is well endowed with natural resources and the economy can be expected to grow at a comparatively high rate, once the effects of many years of serious misnagment are overcome and the Government's rehabilitation program gains momentum. Production of the country's export commodities can be expected to increase steadily, providing a base for developing domestic food production and marketing. At a later stage, small-scale manufacturing industries could be established. In addition, oil and other mineral resources, if they materialize, could speed the country's medium-term development substantially. However,  Equatorial Guinea's very limited capacity for identifying, planning, and implementing investment projects as well as for generally managing the economy will continue to be the most serious development constraint for some time. Second, the private sector will expand its investments and activities only when there is greater evidence of an economic recovery and of the Government's determination to continue to implement economic reform programs and rehabilitate key infrastructures. Technical assistance provided by the international community, including IDA, is expected to mitigate the first obstacle gradually over the next few years. In particular, the resident experts provided under the IDA-financed Technical Assistance Project (para. 21) are expected to assist the Government in preparing appropriate development strategies for the economy as a whole, and sound investment projects in key economic and social sectors. Rehabilitation of urgently needed infrastructure under the RIC and projects financed by other donors will reduce physical development constraints. Implementation of the reform package contained in the RIC and continued good standing with the IMF will confirm the Government's determination to carry through its reform program. 18. Because of its poverty and continuing severe financial difficulties, Equatorial Guinea is not creditworthy for borrowing other than on highly concessional terms. Even if government revenues increase steadily and expenditures are controlled rigorously, the fiuancial situation will remain difficult over the next few years because of the continuing heavy debt service burden. Public savings net of debt service are likely to be negative, and the Government's contribution to public investments will therefore remain modest, at best, for several years. Donors should be ready to assist in financing a high proportion of costs, including a substantial part of local costs, for new development projects and programs. At negotiations, the Government gave assurances that it would restrict future borrowing to concessionary loans and credits through the end of January 1988. PART II - BANK GROUP OPERATIONS IN EQUATORIAL GUINEA 19. Before the present Government came to power in 1979, IDA had made only one US$2 million credit to Equatorial Guinea, for Highway Maintenance. Only minimal disbursements were made from this credit, which was cancelled in 1976 at the Government's request. Economic and political conditions during most of the 1970s prevented the Bank Group from pursuing any economic dialogue with the Government, much less financing projects. 20. After 1979, the Bank Group resumed activities, first as executing agency for a UNDP-financed technical assistance project in the petroleum sector and, in 1982, with an IDA Credit of SDR 2.3 million for technical assistance to that sector. The project is assisting the Government in establishing and staffing a Directorate of Hydrocarbons in the recently created Ministry of Mines and Hydrocarbons and in setting up an energy  -7 - sector data base. Implementation is proceeding satisfactorily, albeit more slowly than originally envisaged. 21. The Technical Assistance Project, approved in May 1984, provides expatriate advisors in several key areas: macroeconomic planning, non-cocoa agriculture, forestry, mining, education, and public debt. It is designed to help the Government (a) elaborate key elements of its development strategy and investment program. (b) prepare development projects, and (c) improve management of the public debt. 22. The Cocoa Rehabilitation Project, approved in February 1985, and cofinanced by BADEA, the European Community, and the OPEC Fund, is designed to help the Government reactivate the institutional, financial, and incentive systems required for a sustained recovery of cocoa production. It focuses on increasing (a) cocoa production, through better incentives (higher wages for agricultural labor, paid in a convertible and easily repatriated currency, and higher producer prices announced in early 1985) and greater availability of production inputs and credit, and (b) receipts from cocoa sales, through improved grading and export marketing of cocoa. Production increases are expected from more systematic harvesting on plantations already being worked and from rehabilitation of areas once cultivated but subsequently abandoned. Adequate producer prices will be maintained as, starting January 1985, they are set taking into account international prices, production costs and prices in neighboring countries and in consultation with IDA (Annex IV, p.1). 23. Equatorial Guinea's implementation performance under the three recent operations has been relatively good. The main Implementation problems are administrative and have been due to the Government's unfamiliarity with Bank procedures and to the long delays in communications. There is no telex service, and telephone and telegraph services are frequently down. Frequent supervision of operations will continue to be the best way of overcoming both these problems. 24. The Bank Group's assistance strategy recognizes the urgent need to: (a) support the Government's rehabilitation program through intensive policy dialogue and technical advice; (b) revitalize the productive sectors and increase exports; (c) alleviate critical shortages of skilled people; and (d) restore badly dilapidated infrastructure. Close coordination with other donors in mobilizing concessionary financing for high-priority operations is essential in the implementation of this strategy. The Bank has encouraged the Government to concentrate scarce domestic and foreign resources on those areas most likely to help correct internal and external imbalances. Among the high-priority operations being identified, a reconstruction project, or individual projects, could be envisaged in agriculture and for the rehabilitation of essential infrastructure. Assistance in education/manpower/training would also carry a very high priority. Additional technical assistance may be necessary in the petroleum sector. Finally, during the supervision of the proposed RIC, we intend to intensify our policy dialogue to help the Government adopt the further adjustments and policy reforms that are required to put the economy  on a path of sustained development. The most important foreseen now are public administration reform, revising the investment code, alleviating constraints to the development of small and medium scale industry and the agricultural fooa sector, and Improving the efficiency of the banking system. PART III - THE GOVERNMENT'S REHABILITATION PROGRAM 25. The failure of the measures introduced in 1980-84 to restore financial equilibrium and stimulate production led the Government to formulate a comprehensive and far-reachlng economic rehabilitation program. The program, which is described more fully in Annex IV, consists of the following elements: (a) Monetary Reform. On January 1, 1985, Equatorial Guinea joined the BEAC and devalued its currency by 82 percent (in foreign currency terms) and replaced it by the CFA franc. (b) Agricultural Policy. The Government has introduced, mostly within the context of the Cocoa Rehabilitation ProJect, a series of policy reforms affecting the agricultural sector, particularly the key cocoa subsector. Starning with the 1985/86 crop, cocoa producer prices are being set in light of production costs, vorld market prices, prices in neighboring countries and in consultation with IDA. The producer price is high (CFAF 500/kg for 85/86) relative to other West African nations where farmers are usually overtaxed and is appropriate for Equatorial Guinea to induce farmers to expand cocoa production more rapidly and increase their income quickly. Other reforms introduced were creditworthiness criteria for granting agricultural credit, and periodic revision of interest rates. (c) Foreign Trade Policy. Following Equatorial Guinea's entry into the CFA franc zone, its trade with the other member countries has become free of all controls on transactions. Trade with countries outside the zone is governed by the general BEAC rules. (d) In the area of public finance, the Government has taken a series of measures aimed at reducing the budgetary deficits that prevailed in recent years. On the revenue side, tax measures (Annex 4, p. 2) have been taken aimed at simplifying tax colilection and administration and raising tax revenue. The Government has established a committee to review the tax system and to further rationalize and strengthen it. The committee, assisted by technical experts from rDEAC, has presented its recommendations and the Important ones have been incorporated in the revised budget for 1986 (see Annex IV). On the expenditure side, the public service payroll has been limited to about CFAF 1 billion both in 1985 and 1986, and an administrative unit has  - 9 - been created for approving and monitoring budgetary expenditure and budget execution. All civil servants have been registered during a cenaus in May 1985, somo 550 civil servants have been discharged and public sector employment has been frozen. The Govermnut intends to further reduce the number of civil servants, but has indicated that it may seek Bank Group advice before proceeding with future reductions. (e) Monatary and Credit Policy. Targets for overall credit and monetary expansion for 1985 and the first half of 1986 have been established and are being monitored under the IMF stand-by arrangement. The BEAC interest rate structure has been applied since January 1, 1985, for loans and deposits with the Central Bank. Interest rates of commercial banks established by the National Credit Board are to be revised periodically in consultation with IMF. Equatorial Guinea's banking system consists of the Central Bank (BEAC), the Credit and Development Bank (BCD) which functions as both a commercial and development bank. and the Guinextebank, a commercial bank, vhich is jointly owned by the "Banco Exterior de Espana" and the Government. The farm credit operations of the BCD are currently being strengthened by the hiring, through the recently approved Cocoa Rehabilitation Project (para 22), of two Internationally recruited agricultural credit specialists, and strict creditworthiness criteria are now being applied in the granting of agricultural credit. Three additional banking specialists will be appointed under the Technical Assistance Project (para. 21) to improve the lCD's performance further. (f) Public Enterprises. The Government has begun to reorganize the parapublic sector in an effort to reduce the financial burden on ths state, end monopolies, and allow the private sector to play a greater role. The parastatal which had the monopoly on distributing petroleum products, EEPGE (Empresa Estatal de Petroleos de Guinea Ecuatorial) was liquidated and replaced by a mixed enterprise with foreign capital participation in August 1984. The state importing firm, EEC (EPresa Estatal de Comercio) was replaced by two mixe enterprises (with majority foreign capital participation and foreign management) in July 1985, ending the former monopoly situation. The conversion of the national airline and the national shipping company into mixed enterprises is underway, and restructuring and conversion into a mixed enterprise of the electricity company is being studied. Prices of petrolem products and electricity tariffs were also increased in 1985, and further increases are expected for the latter (para. 35, Annex IV p 1 and Annex V para 4). (g) The Government has also taken measures aimed at improving public debt manaxemeDt An autonomous public debt agency, the CAADP (Caja Autonoma de Amortizacion de la Deuda Publica) , has  - 10 - been set up, and the country has fully complied with the monthly debt service payments established under the Paris Club procedures. A consultant hired under the IDA-financed Technical Assistance Project (para. 21) is helping the Government Improve public debt recording, reporting, and management, and traln Equato-Guineans to carry out these activities. The consultant has also made a number of recommendations to improve CAADP'a performance in the short and medium term. The adoption of more appropriate statutes, secondment of qualified staff to the CAADP, systematic classification aud centralization of public debt data and classification of responsibilities in the process of debt contracting were the most urgent recommendations, which the Government has already implemented. (h) Public Investment Program. Equatorial Guinea's public investment program is financed almost completely by foreign sources The appraisal mission considered the preliminary 1986 public investment program too large given the country's limited absorptive capacity. A revised program, amounting to about 14 percent of GDP, was discussed and agreed prior to negotiations. It emphasizes the use of strict economic criteria for investments, mainly in the productive sectors and the rehabilitation of existing infrastructure. The domestic contribution to investment projects has been limited to CFAF 600 million (US$1.3 million equivalent) in 1985, and CFAF 1,000 million (US$2.7 million) in 1986. The Gover nent will submit its 1987 public investment program to IDA for review in October 1986 in connection with the UNDP donors conference tentatively scheduled for late 1986. Evaluation of the Program 26. Equatorial Guinea's economic rehabilitation program conveys the Government's conviction that the earlier piecemeal approach to rehabilitation was inadequate, and that little or no progress towards rebuilding the economy could be achieved without profound and comprehensive reforms. These reforms contain measures to restrain public expenditures, reduce distortions in the incentive system, and stimulate production and private investment. The most important one was the entry into the CPA franc monetary zone and the UDEAC with the concomitant effective devaluation of 82 percent. A climate of confidence is being created allowing the private sector to play a much stronger role in the process of economic recovery. The Government's determination to implement the program is likely to act as an effective stimulant towards the international community which has begun to extend substantial financial and technical assistance towards its success. 27. The positive response of private domestic producers and foreign investors is, however, being delayed because agricultural producers and foresters lack necessary inputs and equipment to raise production and  - 11 - exports in the short term. Government also lacks funds to undertake the necessary rehabilitation of crucial infrastructure, for example, the causeway of the port of Bata, which in its current state of disrepair, not only creates physical bottlenecks to increased exports but also makes domestic and foreign Investment less profitable. The RIC would provide funds which would help finance those inputs and repairs at a crucial moment. The RIC would finance approximately 8.5 percent on average of projected Imports in 1986, 1987, and 1988 (disbursements would be from July 1986 to about July 1988). Other donors also finance imports through investment projects and aid programs. However, better coordination between donors, and between donors and Government is required (para. 32). 28. The response of exports in 1986, 1987, and 1988 is expected to be strong: wood exports are expected to increase by 58 percent annually in nominal terms from 1985 to 1988 and coffee exports by some 30 percent annually over this same period. Cocoa production is projected to rise mainly as a result of the Cocoa Rehabilitation Project; however, since the 1985/86 harvest has been adversely affected by serious rain and rodent damage and prices are expected to decline in 1986, exports are only expected to exceed 1985 levels in 1988. Wood exports, which declined in 1985 as disagreements on concession and production contracts between Government and forestry companies interrupted production, are expected to increase very substantially due to the resolution of the disagreements, the rehabilitation of infrastructural facilities, the start of a new concession which should begin operations in 1986, and higher unit export values as underinvoicing becomes less of a problem with better fiscal procedures and following the entry of Equatorial Guinea into the CFA zone, which corrected the previous exchange rate distortion (devaluation of 82 percent - para. 9). The growth of coffee exports will mainly result from the expected 46.4 percent increase in international prices from 1985 to 1986 together with the availability of more inputs and agricultural equipment and higher farmgate prices. 29. Although imports, mainly as a result of the present operation, are expected to grow at a rate of about 11.6 percent a year between 1985 and 1988, the overall balance of payments is expected to Improve in 1986 and 1987 and be slightly in surplus by 1988. No serious financing gap is foreseen for the first two years. The net inflows of medium- and long-term capital because of the RIC and a modest expansion of disbursement of other project assistance are foreseen to be sufficient to finance the major part of the current account deficits of these two years. The current IMF standby program will provide for a major part (US$1.1 million after repurchases) of the overall deficit in 1986. However, an overdraft of US$6 million in the operations account in 1985 will be difficult to cover fully in 1986 and continued assistance from the French Treasury would be required until 1987 unless other sources of financing are found or changes are made to the program. The likely follow-up Fund program in 1987, or some marginal increase in concessionary financing, would finance the overall deficit of 1987. Over the medium term, the overall balance is expected to be slightly in surplus as a result of the successful growth in exports.  - 12 - 30. The Government's reform program is also expected to Improve the budgetary situation. On the expenditure side, the public service payroll for permanent employees has been limited to about CFAF 1 billion in 1986, expenditures on goods and services will be reduced in 1986, and a cap of CFAF 1 billion has been placed on the local counterpart public investment budget in 1986. On the revenue side, several tax increases have been taken with the objective of simplifying administration and raising revenues. A condition of effectiveness would be that Equatorial Guinea had presented to IDA a program, satisfactory to the Association, regarding the management of its public finances and external debt. The budget is expected to be in surplus in 1986 and 1987 before debt amortization, mainly a result of these stabilization measures, increased revenues from export and import duties, the RIC counterpart funds, and a decline in CFAF terms of Interest on external debt. In addition, the fall in oil prices will reduce Government expenditures on oil products. However, after debt amortization and other financing items, it is projected that there will be small financing gaps in 1986 and in 1987 of about CFAF 400 million and CFAF 300 million respectively. A continuation of the budgetary aid from France would be required to cover these gaps. In the medium-term, the increase in tax revenues as exports expand rapidly should allow attaining a budgetary equilibrium. 31. Successful implementation of the Government's rehabilitation program would therefore lead to external and internal balance (paras. 29 and 30). The crucial variable upon which this balance depends is the adequate growth of exports. If export growth is delayed because of unfavorable weather, slow Implementation of the RIC, or unforeseen circumstances, the balance of payments would continue to be a major constraint to economic development unless substantial external resources were made available to offset these factors. However, the overall prospects for an expansion of exports appear favorable. 32. A Round Table meeting sponsored by UNDP is scheduled for January 1987, with a preview meeting to be held in September 1986. These meetings will be particularly useful in giving Equatorial Guinea an opportunity to present its development plans to the international community, and in improving coordination both between the Government and the donor community and between the donors themselves. The RIC would be an important step in the direction of aid coordination by financing those imports and repairs that are crucial to increase production and exports and by complementing reconstruction efforts of other donors (para. 36). It would act as a catalyst for aid coordination by requiring close cooperation with other donors in its implementation and by helping to establish medium-term development priorities through the review of the PIPs of 1986 and 1987 (para. 37). At present, no local aid coordination mechanism is in place.  - 13 - PART IV - THE REHABILITATION IMPORT CREDIT (RIC) 33. The Government requested that IDA support its economic rehabilitation efforts with quick-disbursing assistance. The proposed Rehabilitation Import Credit was prepared in March 1985, and appraised in April/May 1985 by a Bank mission which included consultants financed by France (FAC), the Federal Republic of Germany (GTZ), and the World Food Program (WFP). The operation is tailored to be complementary to the actions of other aid agencies and coordination was achieved through (a) visits to the agencies at their headquarters in February 1985, (b) discussions with donor agencies represented in Malabo in May 1985, and (c) an aid coordination meeting held in Paris in July 1985, under Bank auspices. Negotiations were held in Malabo from February 4 to February 7, 1986. The Equato-Guinean delegation was headed by Mr. Toribio Micha Ela, Secretary General, Planning Miunistry. There is no separate Staff Appraisal Report. A Credit Summary is at the front of this report, and supplemental data are at Annex III. Credit Objectives and Description 34. The levels of imports required for economic rehabilitation will exceed the country's financing capacity until the agricultural sector has Increased its production and exports. The RIC is therefore designed to (a) help Equatorial Guinea weather its projected short-term budgetary and balance of payments difficulties, (b) ensure that the key prerequisites for reactivation of the major productive sector, agriculture, are in place, and (c) introduce several policy reforms which complement the IMF program by focusing on alleviating medium term development constraints (see para. 37 below). 35. The RIC would be consonant with the IMF supported stabilization program and would complement other efforts already undertaken by the international coummity in providing short-term balAnce of payments support and in financing urgent rehabilitation of infrastructure (France, Spain, European Community, Federal Republic of Germany, African Development Fund and others are expected to provide about US$50 million of assistance over the next two years). The expected increase in imports will be financed by large net medium- and long-term capital inflows from the RIC and the projected overall balance of payments deficit of US$1.6 million in 1986 is expected to be financed mainly by proceeds from the IMF stand-by arrangement and some debt rescheduling of bilateral debt already foreseen as a result of the 1985 Paris Club meeting. The projected balance-of-payments deficit of US$3.1 million In 1987 is expected to be covered by proceeds from a new IMF stand-by, and some new concessionary financing. 36. The RIC, to be Implemented over two years (mid-1986 to end July 1988), would: (i) provide funds to import agricultural inputs of all kinds complementing the efforts made through the Cocoa Rehabilitation Project to  - 14 - Increase exports and agricultural production; (ii) finance imported equipment, materials and services for the rehabilitation needs of selected infrastructure (transportation, vacer supply, electricity, telecommunications, and health); and (iii) help the Governmenx introduce appropriate measures needed to achieve rehabilitation objectiveas .I. the various sectors. The sectors which would benefit from the proposed operation were selected by the Government in light of the country's most urgent rehabilitation needs and with the objective of using scarce concessional funds in areas where they can have the maximum impact. The RIC would help support imports for agriculture, transportation, water supply/sanitation, electricity, telecommunications and health. A detailed presentation of the proposed support to these sectors is at Annex V. 37. In addition to helping the Government establish immediate priorities in the importation of goods and services, the RIC operation would include a number of specific policy measures: (i) new borrowing only on highly concessionary terms to reduce the debt burden in the medium-term; (ii) review and approval by IDA of the public investment programs for 1986 and 1987 (para. 25 h) to focus Government's attention on medium-term priorities and projects viability, and strengthen the ongoing UNDP Round Table process; (iii) emphasis on the remobilization, repair and maintenance of existing capital stock which has been neglected or damaged or which has fallen idle (rather than purchase of new capital stock), including government vehicles, which is expected to increase the productivity of investments already made; (iv) adjusting electricity and telecommunications tariffs as necessary to meet operating and maintenance costs and establishing a nominal charge for water to ensure that these facilities will be maintained in the future; (v) establishing standard government procurement procedures; and (vi) strengthening import procedures. At negotiations, the Government agreed to set tariffs for public utilities at levels sufficient to cover their operating and maintenance costs, and to install meters for water supply. Given the poor accounting practices of the utilities, two units will be established by the Ministry of Public Works in Malabo and Bata to monitor the adequacy of tariffs. Frequent supervision and an interim review (para. 52), in particular, would permit IDA to verify that these policy reforms are introduced as planned and that the RIC is being satisfactorily implemented. This review at the end of the first tranche of disbursements would also permit IDA to evaluate the progress of the Government's overall rehabilitation program. Technical Assistance 38. Existing import channels, credit facilities, and implementing agencies in Equatorial Guinea are constrained by the lack of appropriately qualified personnel. Implementation of the RIC would require the services of a number of expatriate technical assistants, some of whom would be made available to the Government under the project; others would be provided under other ongoing IDA-financed operations, and some would be provided by other donor agencies active in Equatorial Guinea.  - 15 - 39. An economist/Credit Administrator, to be hired for two years and located in the Ministry of Finance, would be financed under the RIC. He would have a counterpart appointed by the Government and would advise it on the use of funds under the Credits and on the sectoral implications of particular disbursement decisions. He would also help the Government establish priority import needs, review all import applications submitted by the importing public agencies, ministries, or the private sector and would serve as the secretary of the Interministerial Coordinating Committee established to oversee project implementation (para. 44). On behalf of the Government, the Administrator would determine if the items to be imported under the RIC were (i) eligible for financing under the proposed Credits; and (ii) consonant with the Government's emerging medium-term strategies for the sectors concerned and for the economy as a whole. He would also, on behalf of the Government, monitor the disbursement of funds to the different sectors and make periodic checks that imports were being used for the purposes declared on import applications. He would prepare quarterly reports for the Government and IDA on the use of Credit funds and the implementation of the operation. He would also coordinate the activities of the various consultants involved in the RIC. 40. The services of a Procurement specialist/specifications writer would also be financed under the RIC. He would be hired for two years and would be located, together with his counterpart, in the Ministry of Industry and Commerce and would (a) advise it on the procurement of goods (other than agricultural imports - discussed below) at the lowest cost and in accordance with Bank Group procurement guidelines; (b) assist in the preparation of the quantities and technical specifications of goods to be imported (except for agricultural goods); (c) prepare and supervise procurement both by competitive tender and by other methods; and (d) prepare official procurement guidelines to be used by the Government. As the Credit Administrator and the procurement specialist/specifications writer are necessary for project implementation, it would be a condition of effectiveness of the Credits that these two experts had been appointed and had taken up their posts in Malabo. The Government has requested a PPF advance, which has been approved, to expedite the recruitment of these two experts. Four technical assistants provided to Equatorial Guinea under other IDA-financed projects would also help the Government implement the RIC. A procurement specialist provided under the Cocoa Rehabilitation Project (para. 22) to the Chamber of Commerce for Agriculture and Forestry, the agency responsible for importing agricultural inputs and exporting agricultural products, would oversee the procurement of items for the agricultural sector. Three specialists--a credit expert, a financial controller, and an accounting expert--to be provided under the Technical Assistance Project (para. 21) to the Credit and Development Bank (BCD) would strengthen that institution and assist in making it an efficient source of credit for the private sector. 41. Other technical specialists would also be financed from the IDA Credit to assist the Government in making proper use of the imports financed under the RIC. A civil engineer, to be hired for two years, would oversee the emergency repair work of roads on Bioko and the  - 16 - rehabilitation of the municipal water-supply/sanitation network in Malabo. Independent engineering consultants would be hired on a short-term basis (about six months) to oversee repair of the causeway to the port at Bata. Two mechanics, each for two years, one in Malabo and one in Bata, would assist in the vehicle-repair and -maintenance activities associated with the import program for the transportation sector. The hiring of the technical specialists would be a condition of disbursement for the relevant components (i.e., the emergency repair work of roads on Bioko and the rehabilitation of the municipal water-supply/sanitation network of Malabo; the repair of the causeway to the port at Bata; and the vehicle-repair and maintenance activities, respectively). 42. In addition to the technical assistance described above, the services of technical assistants already in Equatorial Guinea financed by other agencies would also support implementation. The vehicle-repair aceivities of the transportation-sector component would be implemented by the two mechanics (pars. 41) under the supervision of CLUSA personnel for which financing is being considered by the United States (USAID). German technical assistance would oversee the utilization of imports for the fishing subsector. Imports for the health sector would be utilized or distributed by existing technical assistants provided by religious orders and bilateral programs. The World Food Program intends to organize parallel food-for-work programs for the labor hired for the civil-works activities in the infrastructure sectors to be carried out by the Ministry of Public Works. Arrangements with these other agencies are now being finalized. In addition to local coordination by the Credit Administrator, IDA would continue to liaise closely with bilateral agencies that finance experts associated with the RIC. Credit Costs and Financing Plan 43. The two Credits, totalling US$10 million equivalent, would finance US$9.0 million of essential imports and US$1.0 million of technical assistance. All imports from eligible countries, except a few categories which are specifically excluded, would be eligible for financing under the credits. The excluded categories include goods financed by other sources, consumer goods, goods intended for military purposes and precious metals and gemstones. It is expected that 31 percent of the credits would serve the needs of the agricultural sector (including fisheries) and 29 percent would serve the needs of the transport sector. About 10 percent of imports would go to the water supply/sanitation sector; 6 percent to the electricity sector and about 3 percent each to the telecommunications and health sectors. Ten percent would be allocated to technical assistance and 8 percent would initially be unallocated. Credit Implementation 44. Overall responsibility for this operation would lie with the Minister of Finance. He would be assisted by and chair an interministerial Coordinating Committee including the Ministers of Planning and of Commerce and Industry. Establishment of the Coordinating Commitee is a condition of  - 17 - effectiveness. Other ministers would join the Committee on an ad hoc basis, depending on the subjects and sectors to be discussed. The Coordinating Committee would determine national development priorities in connection with the project and decide among inter- and intra-sectoral demands for imports. The Credit Administrator would assist and advise the Minister of Finance, serve as Secretary of the Coordinating Committee, and handle most of the administrative duties connected with the proposed Credits for imports. The day-to-day implementation of the operation would be the responsibility of the Mlnister of Finance, acting on the basis of the decisions reached by the Committee, and in fact delegating most of the administrative duties connected with the proposed operation to the Credit Administrator. 45. It is estimated that about 70 percent of Credit proceeds (excluding techuical assistance) would be used for items for the public sector, including most of the items for the transportation and health sectors and all of the items for the water-supply/sanitation electricity and telecommunications sectors. The proceeds of the two Credits would be disbursed to the public sector through a Special Account (para. 46) at the national branch of the BEAC. About 30 percent of Credit funds (excluding technical assistance) would be used for items for the private sector, Including most of the items for the agriculture sector.1/ Most of the items imported for the private sector would be acquired by the private sector on the basis of credit obtained locally, either through private channels or from the government-owned Credit and Development Bank. Special Account 46. In order to expedite disbursements for eligible expenditures, a Special Account of US$2.0 million equivalent (of which US$1.2 million equivalent from the IDA Development Credit and US$0.8 million equivaler.t from the Special African Facility Credit) would be opened in the national office of the BEAC (para. 45) for such expenditures. On receipt of satisfactory evidence that expenditures financed out of the Special Account were eligible for financing and that the goods had been purchased in accordance with agreed procurement procedures, IDA would replenish the Special Account from the IDA Credit Account and the Special African Facility Credit Account. The minimum amount of replenishment applications would be US$100,000. Counterpart Fund Account 47. At the request of the Government, local currency counterpart funds equivalent to US$500,000 and generated by the sale, to the private 1/ The proposed operation would be implemented concurrently with the Cocoa Rehabilitation Project (para. 22), which provides additional financing of imports for the private agriculture sector.  - 18 - sector, of foreign exchange provided by the proposed Credits would be deposited into a special Counterpart Fund Account to be established at BEAC in the name of the Credit and Development Bank (BCD) for this purpose, as a grant from Government. BCD was established in 1979 as a state-owned development bank. While it is managed by individuals with good banking training, lack of resources and political constraints have hampered its work. Technical assistance provided under the Cocoa Rehabilitation Project (para. 22) has allowed BCD to function satisfactorily in administering the credit component of the Project. The Government has requested that three additional technical assistants (para. 41) be provided to improve its overall performance. The Counterpart Fund Account of BCD would be used to establish lines of credit to the private sector. Credit would be made available in pace with effective demand from the private sector for credit to purchase imports, on commercial terms and on the basis of strict creditworthiness criteria. Both the terms of Credit and their criteria would have to be acceptable to IDA. However, while credit granted to the private sector for the purchase of agricultural items would be lent on the same terms (currently 15 percent per annum, and reviewed annually) and on the basis of the same creditworthiness criteria as those agreed with IDA under the Cocoa Rehabilitation Project, IDA would not supervise the use of the Government's grant. Repayments of principal and interest on such loans would be retained in the Counterpart Fund Account. Local counterpart funds beyond the US$500,000 equivalent grant to BCD would be available to the Government for its use in support of the economic recovery program, including debt service. Establishment of the Counterpart Fund Account in BCD would be a condition of effectiveness of the IDA Credit and the Special African Facility Credit. Procurement 48. All public-sector imports financed under the RIC, except those for rehabilitation of the causeway of the port of Bata, (para. 51 and Annex V, para.2) would be handled through the Ministry of Commerce and Industry. As noted earlier (para. 40), the Ministry would be assisted by a procurement specialist. The handling of imports through the Ministry would allow for the standardization of import and bidding procedures and result in greater efficiency, particularly given the small size of several of the sector categories involved. The procurement of agricultural inputs for the private sector financed under the proposed operation would be handled through existing commercial channels or through the Chamber of Commerce for Agriculture and Forestry, which is already handling the procurement of agricultural inputs for the cocoa subsector under the Cocoa Rehabilitation Project. Other private-sector imports would similarly be handled through existing commercial channels. 49. Procurement under the proposed operation would be in line with Bank Group guidelines. To be eligible for financing from the Credits, individual contracts in excess of US$500,000 equivalent would be awarded on the basis of international competitive bidding. Contracts of less than US$500,000 equivalent would be awarded on the basis of price quotations from at least three suppliers from eligible countries. Provision has been  - 19 - made for procurement by direct purchase under contracts of less than US$100,000 equivalent when urgency had been demonstrated to, and approved by, IDA. The Credits would also finance imports of equipment, materials and services (equivalent to about US$0.7 million) required for repair of the causeway to the port at Bata. 50. Technical assistance would be employed on terms and conditions acceptable to IDA and in accordance with Bank Group guidelines for the use of consultants. All posts to be financed from the IDA Development Credit would be advertised internationally. Expatriate technical assistance financed by bilateral agencies for activities to be carried out under the proposed operation would be hired on terms and conditions satisfactory to the agencies concerned. Disbursements 51. Disbursements would be made against 100 percent of (a) the CIF costs of eligible imports at Malabo or Bata; (b) the cost of technical assistance; and (c) against 85 percent of the cost of the civil works for the Bata causeway, representing the cost of imported materials, equipment and services. Expenditures covered by the IDA credit would be made in accordance with normal IDA rules, while those covered by the Special African Facility credit would be made in accordance with the Resolution establishing the Facility. Since Equatorial Guinea is a relatively new borrower and the proposed operation would be the first of its kind which IDA had financed in Equatorial Guinea, all disbursements, including replenislments of the Special Account (para. 43), would be against full documentation. The Credit Administrator would be responsible for assembling the documentation and preparing and submitting withdrawal applications to IDA. Goods procured by the Government in line with the agreed procedures after February 1, 1986, but before signature of the IDA Development Credit Agreement and the Special African Facility Credit Agreement, and up to an amount not exceeding US1.0 million equivalent, be eligible for financing out of the proposed Credits. 52. Disbursements under the proposed credits would be subject to tranching. The first tranche would cover the period to January 31, 1986, or whenever disbursements under the proposed credits had attained 60 percent of the total of both credits, whichever came earlier. Disbursements under the second tranche would be subject to a detailed review of both the execution of the project and of the Government's rehabilitation program. The review would permit IDA to satisfy itself that (a) the funds of the two Credits were being utilized properly, (b) the related policy measures as well as other provisions of the operation, including tariff adjustments, were being satisfactorily implemented, (c) satisfactory progress was being achieved in the areas of fiscal management, credit and monetary developments, and external debt management which are essential elpments of the Government's rehabilitation program, and (d) the public investment program agreed with IDA for 1986 had been implemented as agreed. The investment program for 1987 would be reviewed in October/November 1986. Further disbursements from the two Credits would be  - 20 - contingent upon the review finding that implementation was proceeding satisfactorily. Accounts, Audits, Reporting, and Evaluation 53. The Ministry of Finance would maintain separate records and accounts adequate to monitor and record the implementation of the proposed operation. In particular, the Credit Administrator would monitor the use and economic effects of the proceeds of the two Credits and would report to the Coordinating Committee and to IDA on a quarterly basis. The Government would have the accounts, records, and financial statements audited each fiscal year by independent auditors acceptable to IDA; funds have been included in the technical-assistance component to pay for these audits. The audited accounts covering the previous year would be submitted to IDA no later than April 30 of each year. In addition, no later than July 31, 1988, the Government would prepare and submit to IDA a completion report on the costs of, and benefits derived from, the operation. Benefits and Risks 54. The principal benefit expected from the proposed RIC is that Equatorial Guinea would have sufficient funds to buy imported Inputs and thus be able to increase agricultural output and exports. This would, in turn, increase farm incomes and government revenues. Assistance to the transportation sector would alleviate present difficulties in evacuating foodstuffs and export crops from the interior and facilitate the distribution of inputs and consumer goods to rural areas. Improvements in the water-supply network, in the health sector, In electricity and in telecommunications with the outside world should make the country a more efficient and healthier place to live and work. Prioritization of the public Investment program and the efforts undertaken to coordinate this operation with those of other donors should establish a pattern which will likely benefit not only the present operation but future ones in virtually all sectors. The elaboration of government procurement guidelines and their systematic application should likewise be of benefit both to the Government and to future operations financed wholly or in part by external donors. Finally, the links between Equatorial Guinea's import program and its sector and overall development strategies can be expected not only to make the allocation of scarce resources more effective, but also to help restore Equatorial Guinea's credibility with the international community and thereby establish an environmnt more conducive to flows of official aid and private investment. 55. There is a risk that the Government's economic recovery policies may alter or that its determination in pursuing these policies may weaken. Equatorial Guinea's record of taking difficult and far-reaching reform measures in the recent past, however, and its current efforts to mobilize a maximum of concessional aid to sustain an adequate level of imports suggest that this Is unlikely. Further risks are that goods imported under the operation might not reach beneficiaries with the necessary efficiency and timeliness to apur the productive process, or that the implementation of  - 21 - the operation might suffer from the dearth of qualified and experienced local staff. The use of seasoned technical assistants in the key positions of Credit administration and procurement and of other technical assistants already In the country to supervise specific activities should mitigate these risks considerably. The risk that it may not be easy to find high-quality technical assistants willing to live and work in Equatorial Guinea appears manageable given the much improved environment and the large number of proposals received for thae posts financed under the Technical Assistance Project (para. 21). PART V - RECOMENDATION 56. am satisfied that the proposed IDA Development Credit would comply with the Articles of Agreement of the Association and that the proposed Special African Facility Credit would comply with the provisions of Resolution No. IDA 85-1 of May 21, 1985, the resolution of the Executive Directors approving the Special African Facility, and I recommend that the Executive Directors approve the two proposed Credits. A. W. Clausen President Washington. D.C. April 16, 1986  - 22 ANNEX I - 22- Page 1 of 8 A 8 L CA PA I EQUATORIAL GUINEA - SOCIAL INOICATORS DATA SHEET EQUATORIAL GUINEA REPERENGE CROUPS ME[NICM AVERAGCS) la MIST (ONST REzCEN hsIuDTIT) lb ,naLk. RECiNT LOW INCOl1 AFRICA MIDDLE INCUNE 9l l974 E STDliTAS/b SOUTH Of SAIARA AFRICA S. oF SAARAA AmmA (ISUDm SQ. El) TorAL 28.3 28.1 28.1 AGRICULTURAL 3.2 3.3 3.3 cn SR CAIPTA (351) . .. .. 23. 1063.8 KII CWESUWtION PR, CAPITA (CILOURAM OF OIL EQUIVALENT) 3u.0 44.U es.O .2.3 581.5 YUIATIOU AMP VITAL STATISTSIC POPULATION.NID-TEAA (THOUSANWS) 244.0 288.o 359.4 URBAN POPULATION (2 OF TOTAL) 25.5 39.U 57.2 20.1 32.U, POPL^ATION PROJECTIONS POPULATION IN YEAR 200 (lLL) 0.5 STATtONARY POPULATION (MILL) I3. POPULATION ICNTP 1.8 POPULATION DENSITY PeR SQ. IN. 8.7 10.3 12.8 33.2 85.1 PmR SQ. IN. AGRI. LAND 77.5 87.5 107.0 L12.8 124.8 POPULATION ArE STEICTURE (2) 0-4 YRS 38.8 40.4 37.8 4b.0 45.6 1544 IRS 57.0 55.4 58.0 50.8 51.5 65 AND A0VE 4.0 4.0 4.1 2.9 2.7 POPULATION CR00TN RATE (I) TOTAL 1.5 1.7 L.7 2.8 2.9 URAN 6.4 5.9 4.7 6.4 5.1 CRUDE 8IRTH RATE (PER THOUS) *. 40.0 39.3 47.2 47.0 CRUDE DEATH RATE (PER HwOS) .. 2b.9 20.9 37.5 15.U GROSS REPRODWCTION RATE 2.4 2.4 2.5 3.3 3.2 FAMILY PLANINGN ACCUTORS. ANNUAL (THOUS) USERS (2 or MARRIED M) .. .. . 3.3 8.4 s00D A mmMc INDEX OF FOOD PROD. PER CAPITA (1969-71-100) 103.7 100.0 . 53.3 82.9 PER CAPITA SUPPLT OF CALORIES (C o RMUIRENNTS) .. .. .. B7.7 95.5 PROTEINS (GRAMS PER DAY) .. .. .. 51.9 55.4 OF WHICH ANMAL AND PULSE .. .. .. 15.7 16.5 CHILD (ACeS 1-4) DEATH RATE 43.7 37.5 29.3 23.1 16.6 ^SEH LIPF EXPECT. AT BIRTH (YEARS) .. 37.2 43.5 47.8 52.0 INFANr rlDRT. RATE (PER TubaS) 387.8 166.6 13b.4 119.5 108.8 ACCESS TO SATZ WATER (%POP) TOTAL .. . .. 27.1 42.4 URBAN .. .. .. 63.5 67.5 RURAL * . * 19.3 35.8 ACCESS TO EXCrA DISPOSAL (l OF POPULATION) TOTAL . .. . 26.5 28.9 URBAN *- ** * 65.4 57.7 RURAL .. .. . zu.8 20.7 POPULATION PER PHYSICIAN 5810.0 11720.0 .. 27901.7 11791.7 POP. PER NURSINC PERSON b20.0 73250. .- 3305.4 2459.8 PGO. PER hOSPITAL 8m TOTAL 190.0 9. 90.0 1273.6 981.1 URBAN 50.0 .. 60.0 77 428.2 368.8 RURAL 9080.0 .. 210.0 Tc 3292.5 4371.9 ADMISSIONS PER HOSPITAL BED .. .. .. .. 27.2 OI.SNC AVERASE SIZE OF HOUSEH0LD TOTAL - *' UR8AN .. .. RURAL .. .. AVERAGE NO. OP PERSONSIROOM TOT.JL .. .. URBAN .. .. RURAL .. .. PeRCENTAGE OF DMELLIME WITH ELEcT. TOTAL .. .. URU. RURAL .. ..  - 23- ANNEX I Page 2 of 8 T A L 3L wPAE 2 OuAORIAL OJINA - SOCIAL INDICATORS DATA SNllT inquAL CWINA nFKURcu CADS (SWucwD AVSau a MOST xomtM Ricu ESTIMATE) l RICNlT LOW INCME AFRICA NIDLE IC 1961b 1970b UllMlUIn rz SMoH or ANnRA uCIA S. or SAHARA ADJUSTED RIIROWINr RATIOS PRIMAt: TOTAL 85.0 75.0 .. 67. 95.7 MAU 103.0 6.0 .. 77.6 100.0 rem" 67.0 64.0 .. 54.9 83.2 SECONDAR: TOTAL 2.0 17.0 .. 13.5 17.3 KALE 3.0 24.0 . 17.9 25.0 FEMALE 1.0 9.0 .. 9.1 14.8 VOCAIWIAL (2 OF SECODR ) 37.8 10.0 *- 13.2 5.9 PUPIL-TZACIBR RATIO PRIMARY 76.0 57.0 .. 44.9 41.1 SCONDARIY 36.0 34.0 .. 27.4 25.5 PASSCE CATUSD POP .. .. .. 3.8 20.8 RADIO RECSIVRS/9ROUSAND POP .. 26.5 311.6 55.J 107.8 TV RECEIVlS2JTITUSAND POP .. .. 3.4 2.6 20.8 NEWSPAPER ("DAXLY GSNZRA. INTEREST") CIRCULATION PER TIOSAD POCULATIOt 3.3 .. 2.8 5.0 18.4 CINEMA AMEJAL ATTIDACE/CAITA .. .. 1.5 Ic 0.5 0.4 rOTAL LABOR PORCE t71101US) 74.0 84.0 106.0 PENILE (PERCZNT) 3.8 4.2 4.6 34.2 36.Z AGCULTUE (PERCENT) 84.0 80.0 76.0 /d 77.5 54.5 INDUSTRY (nRCurr) 6.0 7.0 8.0 Td 9.7 18.3 PARTICIPATION RATE (PEN) TOTAL 30.2 29.1 29.5 39.3 36.8 MALE 59.6 57.1 56.0 50.9 47.1 P8311 2.3 2.A 2.7 28.1 27.2 ECONomC DENDENCt RATIO 1.A 1.5 1.4 1.3 1.3 mOS. DTEr PERaCT OP PRIVATE INCOM RECEIVED by EIGEEST 52 OF HDUSELDS .. 3BIIHZST 20o OP DSK..JSU.I... LGUESr 201 OF HOSELDS .. LOWISr 40Z OF U S ..H...... mrrT -QS ESTIMDUT ALI,%=E PovERT IN LEV CUS PER CAPITA) uA .. .. .. 165.5 590.7 RURAL .. .. .. 95.0 275.3 ZSrinnED REUIIV PMrTl R INWCN LZVEL (USS PER CAPITA) URBA .. .. .. 113.1 545.6 RMUAL .. .. .. 67.6 201.1 ESTIMATED POP. BELOW ABSOLUTE POVET INCOMIE LEVL (1) URBAN .. .. .. 36.6 RURAL .. .. .. 61.8 NOT AVAIILAZ NgT APPLICABLE NOTS C /a The group average for each Indicator ar populatinweighted aritdtic _me. Coverage of countrieu mong the Indcator. deponde an avaIlabILIty of data and In not unafto. lb Unless otherwda noted. "Dtca for 1960" r fer to y yer between 1959 and 191; "Data for 1970 between 1969 and 1971; and data far "Mat becnt Eatimat betwn 1981 and 1983. Jc 1977; fd 1980. JUNE, 1985  -24- ANNE I Page 3 of 8 DUIlNM OSOFsociALINDICAOUS Nots: Alhough shedst aredradwn rromaoumgneNyjudpd thel moat uthrittive and iNable. It should also banned that they may not be innteorunlly cotnmpable baum or the lack of standardlzed deffintions and concepts wd by dilint countrie in collectin the data. The data an, nonethe usful to decribe orders or magntude. indkte trends, and chaacterze certin ajor differnc betwee ountri The reference groups are I I I the - country group of the subject country nd (2) a country group with somewhat higher averg Income than the country group of td subject country (except for "Hig Income Oil Erporters group whre "Middk Incm North Alries and Middle Eaut b echotn buse orstrongnr soda-cultural afnities). In the rkrmnce group duta he tvergs af popultion weighted arlithnalc mans for each indkiator and shown only when majority of thecountrieB in a group hna dnat for that IndIcator. Sinc the coverae of countres amrons the IndIator depends on the availability ordata and is not uniform. aution must beexerissed in relating average os aonindcator to another. The average ae only usful In comparing the valu orone indikctor ate tinse among the country and referent groups AREA (thousand sq.km.) Cru* 51A Rate (per thousandj-Number of live births in the year Teral-Total surface area comprising land area and inland watenr per thousand of mid-year population; 1960, 1970. and 1983 data. 1960. 1970 and 1983 data. Crd Deark Rate (per rh.wdj-Numnber of deaths in the year Agricshural-Estimate or agricultural area used temporarily or per thouand of rnid-year population; 1960 1970. and 1983 data. permanently for crops. pastures, market and kitchen gardens or to Ghs ReproductIon Rare-Avenge number ordaughiers a woman le fallow, 1960, 1970 and 1982 data. will bea in her normal reproductive period if she experiences present age-specific fertility mtes; usually five-year averages ending GNP PER CAtITA (USS)-GNP per capita estimates at current in 1960. 1970. and 1983. market prices, calculated by same converion method as World FaUy P'3naLn-Acceptors. Anmal (tusiands-Annual num- Ba4 Atlas (1981-83 basis). 1983 data. ber of acceptors or birth-control devices under auspices of national ENERGY CONSUMPTION PER CAPITA-Annual apparent family planning program. consumption or commercial primary energy (coal and lignite. FatE Planinr-Users (percen of wrned ainej-The percen- petroleum. natural gas and hydro-. nuclear and geothermal elec- tage of married women of child-bearing age who are practicing or tricity) in kilograms of oil equivalent per capita: 1960. 1970. and whose husbands are practicing any form orcontraception. Women 1982 data. of child-bearing age are generally women aged 15-49. although for some countries contraceptive usage is measured for other age POPULATION AND VITAL STATISTICS groups. Total PopuiBdon. Mid-Year (thousds -As of July 1 1960. 1970. FOOD AND NUTRiON and 1983 data. Urban Poplan (percent of orab-Ratio of urban to total Indexf FeeodPrdwdri. Per Capita (1969I7f-- 100)- Index of per population; different definidtons of urban area may affect compar- capita annual production of all food commodities. Production obility or data among countries; 1960. 1970. and 1983 dama. excludes animal feed and seed for agrieulture. Food commodities include primary commodities (eg. sugarcane instead of sugarl PopuIlation Projections which are edible and contain nutrients (e.g. coffee and tea are Population in year 200-The projection of population for 2000. excluded); they comprise cereals, root crops. pulses. oil seeds. made for each economy separately. Starting with information on vegetables, fruits, nuts. sugarcane and sugar beets. livestock, and total population by age and sex. fertility rates. mortality rates. and livestock products. Aggregate production of each country is based international migration in the base year 1980. these parameters on national average producer price weights; 1961-65. 1970. and were projected at five-year intervals on the basis of generalized 1982 data. assumptions until the population became stationary. Per Capia Sply of Calries (pecnt of reqmirements)-Comput- Stationars population-Is one in which age- and sex-specific mor- cd from caloric equivalent of net food supplies available in country tality rates have not changed over a long period. while age-specific per capita per day. Available supplies comprise domestic produc- fertility rates have simultaneously remnained at replacement level tion imports kss exports. and changes in stock. Net supplies (net reproduction rate - I). In such a ropulation. the birth rate is exclude animal feed. seeds for use in agriculture. quantities used in constant and equal to the death rate. the age structure is also food processing. and losses in distribution. Requirements were constant, and the growth rate is zero. The stationary population estimated by FAO based on physiological needs for normal activity size was estimated on the basis of the projecesd characteristics of and health considering environmental temperature. body weights. the population in the year 2000. and the rate orf dedine of fertility age and sex distribution of population. and allowing 10 percent for rate to replacement level, waste at household level; 1961. 1970 and 1982 data. Population Monenrtu-Is the tendency for population growth to Peo Capita Supply of Prein (gras per dayJ-Protein content of continue beyond the time that replacement-level fertility has been per capita net supply of food per day. Net supply of food is defined achieved; that is. even after the nt reproduction rate has reached as above. Requirements for all countries established by USDA unity. The momentum of a population in the year : is measured as provide for minimum allowances of 60 grans of total protein per a ratio of the ultimate stationary population to the population in day and 20 grams of animal and pulse protein. of which 10 grams the year a. given the assumption that fertility remains at replace- should be animal protein. These standards.are lower than those of ment level from year t onward. 1985 data. 75 grams of total protein and 23 grams of animal protcin as an Popularion Densiry average for the world. proposed by FAO in the Third World Food Per sq.km.-Mid-year population per square kilometer (100 hec- Supply: 1961. 1970 and 1982 data. tares) of total area: 1960. 1970. and 1983 data. Per Capita Protein Supply From Aximdaad Poise-Protein supply Per sq.km. agricultural land-Computed as above for agricultural of food derived from animals and pulses in grams per day: 1961 -65. land only. 1960. 1970. and 1982 data. 1970 and 1977 data. PopuatiOn Age Srretsnre (perceamr-Children (0- 14 years). work- Child (ages 1-4l Death Rate (per thousand)-N umber ordeaths of ing age (15-64 years). and retired #65 years and overj as percentage children aged 1-4 years per thousand children in the same age of mid-year population 1960. 1970. and 1983 data. group in a given year. For most developing countries data derived Population Growth Rate (percentj-rotai-.Annual growth rates of from life tables: 1960. 1970 and 1983 data. total mid-year population for 1950-60. 1960-70. and 197083. HEALTH Popuwation Growth Rate (percemne-rban-Annual growth rates Life Expeetancy at Birth (yearsj-Number of years a newvbom of urban population for 1950-60. 1960-70. and 1970-13 data. infant would live if prevailing patterns of mortality for all people  - 25 - ANNEX I Page 4 of 8 t the tim of of It birth wi to stay the sme throughout its lih; uplMrewher oatlo prbna7. and seodar-Total students en- 1960 1970 and 1983 data. rolled in prmary and secondary evels divided by numbers of how NMarhley REe (per rhauadJ)-Numbar of infants who die teachers In the corresponding eves. befor rechin one yar of ap per thousand lve births in a given yesr 1960, 1970 and 193 data. CONSUMPTION Aam to Sq War (panre qf puwin, ad Paaw Care (per rs d papudej-Passengr cars corn- mi-Number or pwople (total, ran, ad rural) with resonable prie motor cars sating les than eight perons; excludes ambul- access to f water supply (Includts trted urfac wates or anc, heases and military vehicles. munted but uncontamnsted water such u that from protected aieo Recivrs (per rtioatwd popuam-AI1 types of receiven boreholb, spring ad snitary wells) a pectagu of ther re5pO. for radio broadcasts to general public per thousand of population; tdve populations. In an urban ara a public fountain or standpost excudcs unollensd receivers in countries and in years when locaed not mo than 200 mOtO frm a hous may be considered reistion of radio ts was in effect; data for recent years may as being within reasonable access of that houss. In rural areas ntb oprbesnems onre blse nig reasonable accesswould inply that the houswe or members of the bouihod do not have to send a dispropordonate part of the day rV Racd n (wper rthsandpepuaormn-TV rcivers for broadcast Inof rft the fm 's wur ride to general public per thousnd populadon; excludes unlicensed TV InAhing the EsanDy. water tf poXie ereceivenr In countries and in yeas when registration of TV sets was Access to Etwa Dbwipoa (parent of poplatlou)-4oatu, urbis, inefet ad nral-Number of people (total, urban, and rural) served by escret dispoul as ptrceag of their repective populadtons. AWsFF CIrculae (per Ahasvd popudslnJi-Shows the aver Extcr disposl may Include the coliction and disposaL with or age ciulation of "daily genl interest newspaper. defined as a without tatment, of hun excreta and wate-water by water- periodical publiation devoted primanrly to recording gneral news. borne systems or the u- of pit privies and similar installations. It is considered to be "daily" if It appeas at leat four times a week. Pepuotimaper Phskeiaa-l,pulation divided by number of prn- Cinma An_ul Anedacer per Cpt per Year-Based on the tising physicians qualifed from a medical school at university level number of dckets sold during the year, including admissions to tpledo ar NursIng Panon-lpulation divided by number of drive-in cinemas and mobile units. prcticg male and fdema graduate nurse assistat nurs, LABOR FORCEE prctical nurss ant nursing auxiliaries. abor FO Pepuiwlm per Nosia Bd-a, wris si rrel-Population duing armed forcers and unemployed but excluding housewives, (total urban and rural divided by their rspective number of studmg ed covering ulan ofed but Decl itions in hospital beds available in public and private, gneral and specialize students etc covering population of al ages. Definitions an hospitils and rehbilitation centers Hospitals are establishments vanous counties are not comparable; 1960 1970 and 193 data permnently staffed by at least one physician. EstablishMents prov- Fema (pr -Fernale labor force as percentage of total labor iding principally custodial care are not included. Rural hospital force. however. iclude health and medil csten not pernanenly staffed Agribculo (perees4)-Labor force in famiing4 forestry. bunting by a physician (but by a medical itant, nurse, midwife etc) and fishing as percentage of total labor force 1960, 1970 and 1980 which offer in-patient accommodaion and provide a limited range data. of aedial falitides. ndury (pearcen)-Labor force in mining, construction. manu- A4dus pr Hosp*al hi-Total number of admissions to or facturing and electricity, water and gas as percentage of total labor dischargs from hospitals divided by the number of beds. force; 1960 1970 and 1980 data. Paricpauln Rate (percenr-earal, mal, mdfemal-Participadon HOUSING or activity razes are computed as total male, and female labor force Aen Size of Hoseol (pare per hause"h-l4-tal, urban, as percentages of totaL male and female population of all ages andrural-A household consists of a goup of individuals who share rpectively, 1960, 1970, and 1983 data. ese are based on ILOs lvng quarters and their main meals. A boarder or lodger may or participation rates reflecting age-sex structure of the population. and may not be included in the household for statsical purposes long time trend A few estimates are from national sources. Avea Number of Peru par Raoma--orul, urban ad rural- Ecoomi Dependency Red&--Ratio of population under 15. and Avcege number of persons per room in a0l urban, and rural 65 and over, to the working age population (those aged 15-64). occupied conventional dwellings respetively. Dwellings exclude non-permanent strucmres and unoccupied parts. INCOME DISTRELBTIOTN Percentae of DwueWgs wih Eketariia-etal, urba, ad rurat- Pecentage of Total Disponble laonwc (both n cash and kindJ- Conventional dwellins with ectricity in living quarters as percen- Accruing to percentile groups of households ranked by total house- tage of total, urban, and rural dwellings respectively, hold income. EDUCATION POVERTY TARGET GROUPS A#oued Enrollmnt Rados The following estimatcs are very approximate measures of poverty hrhay schoot - total, mak and femae-Gross total, male and levels, and should be interpreted with considerable caution. female enroUment of all ages at the primary level as perentages of Estied Absole Povey Income Leve (U55 per capita)-ran respective primary school-age populations While many countes and rura-Absolute poverty income level is that income ievel consider primary shool age to be 6-11 yeass others do not The bdow which a mrinimal nutritionaUlly adequate diet plus essential differences in country practi in the age and duration of school non-food requirements is not affordable. are rflected in the ratios given. For some countries with universal Eimated Rdatm Pverty Income Levd ((S1 per capitra)-rban education, gross enrollment may exceed 100 percnt since some ad rural-Rural relative poverty income level is one-third of pupils are below or above the country's standard primary-school average per capita personal income of the country. Urban level is age. derived from the rural level with adjustment for higher cost of Secotnary schot - totl. male and femala-Computed as above, living in urban areas. secondary education requires at least four years of approved pri- Estimaed Popation Below Absolute Pbroerty Incese Level (per- mary instruction; provides gnenraL vocational or teacher training cent)--rbar ad rural- Percent of populatio:i (urban and rural instructions for pupils usually of 12 to 17 years of age; correspond- who are "absolute poor. amce courses are geneaUy excluded. Vocationcl Enro/llffe (percent of secondary)-Vocational institu- Comparative Analysis and Data Division tions include technicaL industrial or other programs which operate Economic Analysis and Projections Department independendy or as departments of secondary institutions. June 1985  - 26 - ANNEX I Page 5 of 8 Table 1: Umlante of Paymnts 1I1 (in millions of current US dollars) 1190 1991 1192 1993 1984 1985 198l 1997 1S01 1991 199 E:ports, f.o.b. 14.7 15.7 14.4 19.3 19.7 23.2 23.2 33.1 42.4 50.4 59.4 Of nhich: cocoa 12.6 12.5 10.6 13.2 11.7 16.1 10.8 14.3 17.2 19.9 22.5 tiner 1.5 2.5 3.4 4.6 6.6 5.6 10.1 15.9 21.9 26.1 32.8 coffee 0.6 0.7 0.4 0.5 0.4 1.3 2.2 2.5 2.9 3.3 3.7 other 0.0 0.0 0.0 0.0 0.0 0.1 0.2 0.3 0.4 0.4 0.5 Imports, c.i.f. 33.4 39.3 37.0 29.1 30.0 31.6 32.6 39.2 43.9 49.3 58.9 Df ntich: projects N.A. N.A. N.A. N.A. 5.5 3.4 6.2 9.0 7.3 5.9 6.9 petroleun 1.6 3.1 N.A. H.A. 4.0 4.1 3.0 3.7 4.2 4.7 5.3 other N.A. N.A. N.A. N.A. 20.5 24.0 23.3 26.5 32.3 38.9 46.9 Trade Balance -18.7 -22.6 -22.6 -9.9 -11.3 -9.4 -9.3 -6.2 -1.5 1.1 0.e Services (net) -2.5 -3.3 -4.9 -7.1 -6.4 -9.1 -9.3 -8.2 -8.5 -9.3 -11.e Of which: interest -o.5 -2.1 -3.5 -5.? -4.9 -e.0 -6.1 -5.9 -5.7 -5.4 -5.3 other -2.0 -1.2 -1.5 -1.4 -1.5 -2.1 -2.2 -2.3 -2.8 -3.9 -5.7 irensfers [net) 3.4 4.0 5.3 &.2 6.5 8.4 9.4 9.9 9.4 9.5 10.6 CErent Account Balance -17.8 -21.9 -22.1 -10.7 -11.2 -8.1 -9.2 -5.6 -0.5 1.3 0.2 Short-term Capital 0.0 0.0 0.0 0.0 0.0 3.6 5.6 -0.5 -0.5 0.0 0.v HL.t Loans (net) 11.6 12.2 19.6 1.5 0.9 -1.0 2.0 2.9 1.5 0.3 1.9 Disbursements 14.0 18.5 29.0 15.7 9.5 5.9 9.6 12.4 11.0 9.7 11.3 Repayments -2.4 -a.3 -9.4 -14.2 -9.6 -6.9 -7.7 -9.5 -9.5 -9.4 -9.4 Errors and Dmissions -7.4 -9.9 -15.0 -9.1 -1.3 -9.9 0.0 0.0 0.0 0.0 0.9 Overall Balance -13.6 -19.6 -18.5 -17.3 -11.6 -14.4 -1.6 -3.1 1.5 1.6 2.2 Debt Service Ratio IlI) :2: 9.5I 39.31 70.0 89.41 56.71 44.1 48.12 37.6I 2.9. 25.5; 21.5? Notes: I Projections assume Government nill Continue to iaplement reform proqram. :21 After reschedulinq and change in arrears and as a percent of exports of goods and NFS. the debt service ratio for 1984 is l20. betiuse of a larqe accumulation of arrears. the IMF debt seruca2 za e:cluded. Source: IIF and staff Estim.tet and projections. 3 /15/86  Annex I - 27- Page 6 of 8 Table 2: Central Governmont Budget. (millions of Cf